Cash offer vs. consignment: which one actually pays you more?

Every finance team sitting on aging component inventory eventually asks the same question: should we take the cash offer, or put it out on consignment?

The honest answer is that both models work, and one clearly beats the other in two specific situations. Here's the math, and how to tell which side of the line your inventory falls on.

How each model actually works

Outright cash purchase

A distributor buys the lot from you at a discount to expected resale, wires the money, and takes title. Your working capital comes back this quarter. Anything the distributor does with the parts afterward — including holding them for two years and reselling at full market — is their problem and their profit.

Consignment

You keep title to the inventory. The distributor stores it, lists it, and sells it into their channel over time. You get paid a share of the actual sale price as each lot moves, usually monthly. Anything that never sells eventually comes back to you or gets written off.

The math, side by side

Consider a hypothetical excess lot with a book value of $100,000 and an expected resale value in the broker market of $60,000 over 18 months.

• Cash offer: The distributor pays roughly 30–45% of expected resale up front. On this lot, that's $18,000–$27,000, wired in a week.
• Consignment: The distributor takes a 25–40% commission. If the lot fully sells at $60,000, you net $36,000–$45,000 — but spread over 12–24 months, and only on what actually moves.

Consignment nets more if the parts sell. Cash gets you paid faster and eliminates the "if."

The right choice depends less on the parts than on whether your finance team optimizes for cash this quarter or gross recovery over two years.

When cash clearly wins

Take the cash offer when any of these are true:

• You need working capital this quarter. A wire this week is worth more than a marginally larger payout over 18 months.
• The parts are in a declining market. Anything with an obvious replacement, an EOL date already announced, or falling demand loses value while it sits in consignment.
• The lot is small or mixed. Sub-$25,000 lots aren't worth the ongoing administrative overhead of a consignment agreement.
• You want the inventory off your books. Consignment doesn't clear the audit trail — you still own the parts.
• Storage or destruction costs are eating the recovery. Once you factor in warehouse rent and cycle counting, small consignment payouts often turn negative.

When consignment clearly wins

Choose consignment when:

• The parts are actively short. Anything on a current allocation list or with 40+ week franchise lead times will move fast at full broker market price.
• The lot is large and clean. A single-manufacturer, factory-sealed, well-documented lot over $100,000 will typically outperform a cash offer by 30–60%.
• You have the balance-sheet room to wait. If the inventory isn't costing you audit friction or storage cash, the higher gross recovery is real money.
• Traceability is intact. Franchise-channel provenance with full paperwork commands full broker market prices. Broken traceability doesn't.

The hybrid model most people don't ask about

The version we quote most often is neither pure cash nor pure consignment: a partial cash offer with a consignment tail. We wire a smaller cash number up front, then pay a share of upside as the balance of the lot sells over 12–18 months. The seller gets working capital immediately, keeps some exposure to the resale, and doesn't have to argue internally about which model to pick.

Ask for that structure by name if it fits your situation — most distributors will quote it, most sellers don't know to request it.

What to send us to get a real number

A spreadsheet with these five columns is enough for a quote, cash or consignment:

1. Manufacturer part number
2. Manufacturer
3. Quantity available
4. Date code range (if known)
5. Packaging and condition (factory-sealed reel, MSL bag, opened tube, etc.)

No login, no portal, no NDA to sign before we look. Reply within one business day, quote within two.

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